Locking in tax declarations

Authorities intend to prevent companies and self-employed professionals from altering data

Locking in tax declarations

The Finance Ministry and the tax administration (AADE) are planning on “locking” pre-filled value-added tax declarations as well as the E3 tax form, at least regarding the declared income of businesses and professionals, in an attempt to contain tax evasion. In a second phase, the expenses codes will also be “locked,” as businesses, and especially freelance professionals tend to inflate their expenses.

At the same time, the ministry is expanding obligatory electronic transactions to all economic activities, so that ever sector of the economy will be required to have terminals for card payment for both business-to-business and retail transactions. This means that all retail businesses equip themselves with POS machines.

Discussions have begun with the market stakeholders and immediately after the completion of the planning the integrated plan will be presented, leading to the reduction of tax evasion and by extension to the financing of tax relief.

Already for the VAT returns submitted from December 5, 2022, AADE pre-fills the revenues and expenses and the corresponding taxes in the relevant codes of the VAT declaration tables based on the data transmitted to AADE’s digital platform myDATA.

Especially with regard to VAT inputs, all costs are pre-filled in code 361 (purchases and costs within the country). Expenditures from documents issued by a company with an activity for which, according to the law, no VAT deduction is provided (e.g. accommodation, food, drinks, hospitality, entertainment, travel, etc.) are not included in the pre-filling process. Of course, usually VAT is not deducted for these expenses and therefore they are not pre-paid.

The changes ministry officials are working on provide for the “locking in” of revenue. This means that businesses and professionals will not be able to change the amounts that are pre-filled by AADE and come from the myDATA digital platform. For those who have income from purchases within the EU, another code will be added that will be open; that will also lead to the “locking” of the codes of the E3 form too.

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